University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: March 20, 2015

Abstract

We provide new estimates of merger value creation by exploiting revealed preferences of merging banks within a matching market framework. We find that merger value arises from cost efficiencies in overlapping markets, relaxing of regulation, and network effects exhibited by the acquirer-target matching. Beyond our findings, the revealed preference method has notable advantages that warrant its application beyond the bank merger market. Notably, we show the method outperforms reduced form alternatives out of sample, enables sensible counterfactual experiments, and that it can be used to evaluate private-to-private mergers, which have been understudied due to lack of stock market data.

SSRN Rankings

About SSRN

We use cookies to help provide and enhance our service and tailor content.By continuing, you agree to the use of cookies. To learn more, visit our Cookies page.
This page was processed by aws-apollo4 in 0.218 seconds